Liberty lovers may soon rejoice: some familiar names are working on a free-market solution for the US health-care conundrum.
Amazon.com Inc., Buffett’s Berkshire Hathaway Inc., and JPMorgan Chase & Co. made news on January 30 for coming together to change how health care is provided to their combined 1 million US-based employees.
Although their plan is still in the works and only focused on providing care for their own staff at the moment, they say their efforts to reduce costs are “free from profit-making incentives and constraints.” In other words, their health-care venture will run more like a nonprofit than a for-profit entity, with immediate financial concerns ancillary to patient needs and quality of care. The objective will be to find avenues for innovation that support the labor for their for-profit enterprises.
“The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” said Amazon’s Jeff Bezos in a statement. “Hard as it might be, reducing healthcare’s burden on the economy while improving outcomes for employees and their families would be worth the effort. Success is going to require talented experts, a beginner’s mind, and a long-term orientation.”
In the current US health-care system, patients are waiting an average of 24 days to schedule an appointment with a doctor, according to a study of commonly used specialty physicians in 15 major US cities. Long wait times often lead to shorter face-to-face visits with doctors and a lower standard of care.
News of the “Amazon effect” coming to health care already has major insurers worried.
After the announcement, insurer Cigna and Anthem stocks dropped by more than 5 percent, while UnitedHealth, Aetna, and Humana were down about 3 percent. Even popular drug stores, CVS and Walgreens, declined more than 4 percent.
Chuck Self, chief investment officer with iSectors, believes this partnership is the start of a restructuring of the health-care industry.
“This could be the catalyst for something bigger.… it's part of the Amazon-ization of the nation, but it's now clearly more than just Amazon,” Self told CNN Money.
Amazon has truly changed the way we shop, listen to music, buy groceries, and even check the weather before we leave home for the day. Sales for the retail giant jumped 38 percent to $60.5 billion in the December quarter, slightly topping forecasts. Net income more than doubled to $1.9 billion from $749 million in the fourth quarter of 2016, helped by a $789 million provisional tax benefit from the recently enacted federal tax bill.
Business is so good, a plan to build a second headquarters is causing a frenzy among US cities, large and small, as they bid for the opportunity to share in some of that Amazon success. A public first round that included 238 cities has been narrowed down to just 20 for the second North America headquarters that would bring in an estimated $5 billion investment and roughly 50,000 jobs.
Amazon’s shortlist includes larger, technology-centered cities such as New York, Boston, Atlanta, and Austin, and then some dark horses — Indianapolis, Columbus, and Nashville — which are particularly competitive due to housing affordability.
Although the speculated tax breaks and government subsidies for a second headquarters would be cringe worthy, there’s no doubt that a potential health-care package from companies renowned for customer satisfaction should keep current insurers on their toes.